Q&A -- Phillips: Putting a price on the Northern Forest

Vermont Business Magazine, Sep 01, 1998

The old notion that a healthy natural environment and a high quality of life are expensive luxuries isn't entirely gone, but clearly these are different times when Les Otten, CEO of the American Ski Company, joins the board of directors of the Conservation Law Foundation.

Another sign of change is that The Wilderness Society, sometimes thought of as a group that wants to "lock up" wild land, has hired an economist to help promote rural economic development, among his other responsibilities. The new direction is a sign that conservation organizations recognize that rural people cannot be expected to support conservation measures if they threaten economic vitality.

Spencer Phillips is the society's economist covering the Northern Forest, a 26-million-acre region stretching across the Adirondacks of New York, the Green Mountains and Northeast Kingdom of Vermont, the White Mountains of New Hampshire and the north country of Maine. (By comparison, Vermont has a total landmass of 6 million acres.) In that region, Phillips is charged with helping rural communities find ways to make a living from the resources of the forest in ways that can continue indefinitely, without diminishing any of benefits of the forest that gives the region its character.

Phillips is wrapping up work in a PhD in economics from Virginia Tech. His thesis research determined that land values increase significantly in Vermont, the closer the parcels are to federally designated wilderness areas in the Green Mountain National Forest. Phillips says this phenomenon is a measurable indicator of what economists call the "amenity value" of attractive places to live and visit, which is an increasingly important factor in the economies of the Northern Forest region.

Phillips has also found that in contrast to other Northern Forest states, Vermont actually has been gaining forest products manufacturing jobs. This is primarily because much of Vermont's forest has been managed for the production of lumber, furniture and other high-value products, rather than pulp and paper.

Richard Andrews interviewed Phillips in August at his home office on the edge of the Sterling College campus in Craftsbury Common.

VBM: What inspired you to get into the dismal science?

PHILLIPS: Of economics itself, or environmental economics?

VBM: Both.

PHILLIPS: Economics, first. It was a combination of reconsidering my physics major, wanting something with different job prospects and a people orientation. I got really interested in economics after my first economics course, and I switched after my first year of college.

As for environmental economics, I was a couple of years out of school, thinking about what I wanted to do long-term. An article in Wilderness magazine convinced me that the cause of conservation needed more people who could understand, speak and work with the language and the arguments of economics. So I pursued graduate degrees in environmental economics.

VBM: What is environmental economics?

PHILLIPS: It's a subdiscipline that deals with the value of the natural environment. In part that means trying to put that value into financial terms--putting a dollar value on open space, recreational opportunities, wildlife habitat.

It also means developing economic and market-oriented incentive mechanisms to protect the natural environment, either as a substitute for or, more often, a complement to command-and-control-type regulation, which is more of an engineering approach.

VBM: So you'd be Looking at public policy to create incentives, rather than regulation?

PHILLIPS: Right. Fiat, or command-and-control-type regulation, has gotten environmental protection about as far as it can. The initial Clean Air Act and Clean Water Act ideas of, you shall use a certain type of control technology to keep nutrients out of your outflow or keep sulfur dioxide out of the air, have about reached their limits.

Now the sources of pollution are so diffuse, and the remaining levels of pollution are lower, so that it takes a more flexible and incentive-oriented, market-like approach to get the remaining environmental problems.

VBM: How long have you worked for The Wilderness Society?

PHILLIPS: It'll be six years in December.

VBM: What is the society's purpose, and how is it funded?

PHILLIPS: We are a nonprofit membership organization. Our purpose is to protect wilderness, wildlife habitat, parks and natural areas, and to foster an American land ethic. We were founded in 1935, and have roughly 200,000 members across the country. We're funded by their support and grants from foundations.

VBM: What is a land ethic?

PHILLIPS: A land ethic was first proposed by Aldo Leopold in The Sand County Almanac, which was published 50 years ago next year.

The idea is that our standard of ethical treatment of our community of things and people should be expanded to include the natural world. Our community needs to include the land itself. In Leopold's words, a land ethic replaces man as a conqueror of the natural world with man as a plain member.